Bitcoin

Bitcoin (BTC) Miners Are Being Courted by Private Equity Giants in AI Opportunity

Published

10 months ago

6 July, 2024

Bitcoin (BTC) Miners Are Being Courted by Private Equity Giants in AI Opportunity

Private equity (PE) firms are finally seeing value in bitcoin (BTC) miners, thanks to the growing demand for data centers that can power machines related to artificial intelligence (AI).

Bitcoin miners’ need for massive amounts of energy is no secret – in fact, it’s a much debated topic. With the rapid rise of the AI sector, the thirst for power by AI-related companies is also not far away. There are reports from the industry already using as much energy as a small country and could grow even more. This growth is creating a problem for the AI industry: Investors are pouring money into the sector, but companies don’t have ready access to the infrastructure to power the growing computing needs.

This is where bitcoin miners and their data centers are becoming a lucrative option for investors, Adam Sullivan, CEO of one of the largest mining companies, Core Scientific (CORZ), told CoinDesk in an exclusive interview.

“Private equity is obviously chasing the data center space now; even private equity firms that haven’t necessarily done data centers before are evaluating the space,” Sullivan said. These PE firms ultimately see value in bitcoin miners as they can help AI-related companies house their machines in already-built mining infrastructure or partner with miners to build data centers faster than building from scratch.

“One of the biggest constraints [for data centers] “Right now it’s finding sites that have over 100 megawatts of power and have the high-voltage substation transformer in place. Those are hard-to-find sites, and it turns out that’s been the criteria for finding bitcoin mining sites for the last four years,” Sullivan said.

Core Scientific recently signed a 12-year, 200 megawatt (MW) contract business with cloud computing company CoreWeave for AI-related computing needs, with options to further expand capacity.

Sullivan noted that since news of the deal broke, Core Scientific has received several approaches from top-tier private equity firms offering funding for more AI-related partnerships. In fact, the deal has sparked a reclassification of the bitcoin mining industry as it renewed investor interest in the sector. JPMorgan went further and said the deal validates the mining industry’s involvement in high-performance computing (HPC) and could usher in a new era of mergers and acquisitions for miners.

One of the main reasons private equity is interested in the mining sector right now is the recent Bitcoin halving, which cut Bitcoin rewards in half, making it more competitive for miners. Many miners are struggling to keep their businesses profitable, and some are looking to sell their businesses or diversify their revenue streams by repurposing their data centers to host HCP and AI-related computing machines.

“The halving has also caught the attention of private equity firms, who see this event as an opportunity to consolidate smaller companies and incorporate their existing infrastructure into their own,” the firm said in a note dated July 2, adding that some mining stocks including Hut 8 (HUT) and Bitfarms (BITF) have performed “exceptionally well” since the halving.

However, the amount of capital required to build or repurpose data center clusters to accommodate AI computing is not cheap. In such a competitive market, it is becoming prohibitively expensive for some miners to do so and private equity is now seeing an opportunity to help these miners by providing financing and other expertise, said Core Scientific CEO.

“A lot of these Bitcoin mining companies are struggling right now to build their Bitcoin mining facilities, and these private equity firms are looking at potential returns, looking for ways to get economic value out of some of these potential conversions. [from mining to HCP]Sullivan noted. In many cases, these PE firms can provide a significant amount of assistance to some of the more “underqualified” miners, including bringing in a new partner or introductions to new potential clients, he added.

Another reason PE firms are circling the mining sector now, after ignoring it for several years, is that previously, “the value was too volatile for its return profile.” Long-duration HPC deals, such as the 12-year deal signed by Core Scientific, are “much more viable and investable for private equity firms,” Sullivan added.

The business model for private equity is own-to-sell: buy a business or asset, tweak or completely change the business model, and then sell the company to maximize returns. Will this mean the end of bitcoin miners?

The answer is not so simple, according to Sullivan.

First, this would be part of a broader shift for some sections of the mining business. The upcoming halving will continue to make the industry more competitive, pushing for lower-cost mining sites, which are likely to see the most interest from HCP and PE companies.

Second, not all mining sites in use today can be converted into data centers. A number of variables may make some sites unsuitable for HPC conversion, and he added that these will remain mining sites as long as it is economically viable for them to remain in the mining business.

However, before miners can make it to the next halving, they must survive what happened this year. The overcrowded mining space is now feeling the pressure of the margin squeeze, resulting in a wave of acquisitions and renewed deal negotiations among miners.

In fact, Core Scientific rejected a $5.75-per-share takeover offer for CoreWeave on the same day it signed the 200 MW deal, saying it significantly undervalued the company. When asked about the status of the deal, Sullivan said both companies are now focused on organic growth opportunities. At the same time, Core Scientific is aggressively pursuing new sites and is in talks with potential new customers.

Still, unsurprisingly, the CEO of the public mining company said that if a potential suitor is willing to pay what the shareholders and board consider to be full value for the company, the company will have to consider the offer. Despite the outright rejection of the offer, Sullivan thinks M&A is just getting started in the mining space.

The recent wave of M&A activity has also seen a hostile takeover battle between Riot Platforms (RIOT) and Bitfarms, CleanSpark (CLSK) buying GRIID (GRDI), and Hut 8 securing AI-related funding, and that’s just the beginning.

“I think we’re still at the beginning of the merger and acquisition that will occur over the next 12 months,” Sullivan said.

“I believe many companies are much more incentivized to sell their businesses to other larger companies given infrastructure constraints, or look to convert more of their facilities to HPC,” he noted, adding that most “mid-market” miners are likely to put themselves up for sale.

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Bitcoin

What to watch for in the markets

Published

9 months ago

21 July, 2024

SatoshiTimes Staff

Photo: Andrew Harnik (Getty Images)

After witnessing one of the largest global IT outages on record, affecting the travel, finance and healthcare sectors worldwideThis week is set to see more political drama, events, and earnings reports from tech giants.

Donald Trump’s ‘Lovefest’ Sets Jamie Dimon Up for Consideration for Treasury Secretary Job

Let’s take a look at what awaits us:

Major companies will release their earnings reports

Major tech companies and others will release their earnings reports this week, paving the way for what the second half of 2024 will look like.

Monday

Verizon will report earnings before the start of operations.

Tuesday

Coca-Cola, Comcast and UPS are all set to report earnings before the market opens.
Tesla will report earnings in the morning, while General Motors will report earnings in the evening.
Alphabet and Visa will report results after the market closes.

Wednesday

AT&T will release its report before the market opens.
Ford and Chipotle will report earnings after the market closes.

Thursday

Earnings reports from AstraZeneca, American Airlines and Southwest Airlines will be released before the market opens.

Trump to speak at Bitcoin conference

Presumptive Republican presidential nominee Donald Trump will speak at the next Bitcoin Conference in Nashville, Tennesseewhich is scheduled for July 25-27. While this is the first time a presidential candidate will attend the conference, it has sparked a debate over whether the crypto-friendly Trump will receive support from the crypto community in the upcoming election.

In addition to Trump, independent presidential candidate Robert F. Kennedy Jr. will also discuss crypto during the conference. Crypto advocates such as ARK Investment’s Cathie Wood, MicroStrategy’s Michael Saylor, and whistleblower Edward Snowden are among some prominent names who will be participating in the conference.

Ether ETFs are on the way

New Ether Spot ETFs are set to begin trading on Tuesday, July 23. Much like the spot Bitcoin ETFs, these ETFs will allow investors to buy the second most popular cryptocurrency like stocks. BlackRock, Ark Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Franklin Templeton, and Invesco/Galaxy Digital are all set to offer Ether ETFs. Crypto asset manager Bitwise predict that trading in the Ether ETF will drive the price of Ether higher, potentially surpassing $5,000.

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Bitcoin

Cryptocurrency’s Biggest Winners and Losers in a Second Trump Presidency

Published

9 months ago

21 July, 2024

SatoshiTimes Staff

Cryptocurrency’s Biggest Winners and Losers in a Second Trump Presidency

Bitcoin miners and cryptocurrency companies that have been blocked from going public in the U.S. could ultimately be the biggest winners in the digital asset world under a second Donald Trump presidency. Foreign companies at risk of losing market share could end up being the biggest losers.

That’s the view that’s taking hold among market participants and observers in the wake of the former president’s growing embrace of cryptocurrency as his chances of election grow. survey released Thursday by CBS News showed Trump with the majority — 52 percent — of likely voters in his likely November rematch with President Joe Biden.

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Bitcoin

Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske

Published

9 months ago

21 July, 2024

SatoshiTimes Staff

Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske

Cryptocurrency investor Chris Burniske says Bitcoin (BTC), Ethereum (ETH), Solana (SUN) and the cryptocurrency market in general seem poised for a run.

Former Head of Cryptocurrency at ARK Invest account his 292,200 followers on social media platform X that several catalysts are aligning, suggesting that digital asset markets are on the verge of a bull run.

According to Burniske, a partner at venture capital firm Placeholder, the highly anticipated launch of Ethereum-based exchange-traded funds (ETFs), Republican presidential candidate Donald Trump speaking at an upcoming Bitcoin event, and the current state of the BTC, ETH, and SOL charts all suggest significant optimism for the cryptocurrency markets.

“With ETH ETFs set to go live, Trump speaking at The Bitcoin Conference, and BTC, ETH, and SOL charts looking [they do] (while stocks are weak), it’s hard to imagine a world where we don’t ship next week.”

Reuters recently reported that preliminary approval for ETH ETFs has been granted as the Bitcoin Conference is scheduled to take place from July 25-27.

BTC, ETH, and SOL are trading at $67,333, $3,528, and $174 at the time of writing, respectively.

The venture capitalist too provides an update on his prediction that the total crypto market cap will eventually hit $10 trillion. According to his chart, the path to $10 trillion is currently “23%” complete, as it sits around $2.2 trillion.

Source: Chris BurniskeX

Earlier this month, Burniske he said in an interview with Real Vision CEO Raoul Paul that he has his eye on the Move ecosystem, which was originally built by social media giant Meta and then used to develop layer 1 blockchains Sui (IUE) and Apts (APT).

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Bitcoin

Here’s the next target for BTC before bulls can hold out for $70K

Published

9 months ago

21 July, 2024

SatoshiTimes Staff

Here’s the next target for BTC before bulls can hold out for $70K

Bitcoin’s recovery is going well, and the market is seemingly poised to create a new all-time high in the near term.

Technical analysis

Per NegotiationRage

The daily chart

As the daily chart shows, the price of Bitcoin has been rising since it broke above the 200-day moving average.

The market has also reclaimed the $60K and $65K levels and is moving towards the $68K resistance zone, which could be the last hurdle before creating a new all-time high. With the RSI also indicating that the price has clear bullish momentum, it could be just a matter of time.

Source: TradingView

The 4-hour chart

Looking at the 4-hour chart, it is evident that the price has been rising rapidly since breaking the downtrend line to the upside. The market also broke the $65K resistance level with momentum, turning it into a support.

While almost everything points to a new record high in the coming weeks, there is one worrying sign. The RSI is showing a clear bearish divergence between recent price highs, which could indicate a correction or even a reversal in the near term.

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Cryptocurrency Charts by TradingView.

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